Coal auction: Allotment order to new operators to include clearances

New Delhi: In what was the first working of the new transparent regime of coal allocations, the central government in a meeting today with successful auction bidders decided that most clearances required to start mining would be would be incorporated in the “vesting order” transferring rights to the new owner.

The vesting order, to be issued by March 23, transfers to the successful bidder all the rights, title and interest of the prior allottee and a mining lease that will be granted by the state government.

Among the statutory licences and clearances required to start coal mining are ministry of environment and forest approvals, consent from the local pollution control board, mines safety clearances and an excrow account for dealing with early exit from operations.

“For all the clearances required, our ministry will sit down with officials of all the concerned ministries to see how these can be included in the vesting order as much as possible,” Coal Secretary Anil Swarup told representatives of state governments and companies that have won mines in the first two rounds of coal auctions that concludes on Monday.

“For this, I will require you (new allottees) to send in your suggestions by tomorrow (Tuesday) evening,” he added.

The central government was keen to facilitate so that operations that were halted by the Supreme Court order, except in 42 producing mines, could begin by April 1, Swarup said.

Coal producing states stand to gain as much as Rs.55,000 crore from Round Two of e-auctions of 12 blocks that have been offered so far after the Supreme Court had declared the original allotments illegal and ordered fresh tendering.

In the first phase of auctions that concluded last month, 19 blocks were on offer and would raise for the state governments of Chhattisgarh, West Bengal, Jharkhand, Odisha and Maharashtra as much as Rs.109,000 crore over 30 years, as per officials.

Swarup told the Chhattisgarh government representative that by Monday Chhatisgarh had gained Rs.67,500 crore through the ongoing auctions.

Under the bidding process approved by the government, the shortlisted participants are required to submit an initial financial bid along with the technical details. On the actual date of the e-auction, the bidder is permitted to anonymously submit as many final price offers as desired.

The auction is on the basis of tariff-based reverse bidding where the end-use is power generation, and forward bidding for production of steel, cement and generation of power for captive use.

While the criteria for calculating the floor price for bidding is based on state miner Coal India’s (CIL) price of coal of the same grade, the auction also has a ceiling price for power sector bidders to keep the lid on power tariffs.

Union Finance Minister Arun Jaitley has said the yields of upto Rs.1 lakh crore from the first few rounds of coal block auctions was proof of the improved governance brought in by the NDA coalition.